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Update Covid-19 Support: Changes to CJRS and SEISS

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Click on the links below to read the latest updates on the support and funding available to businesses, individuals and third sector organisations facing the Covid-19 pandemic

The Coronavirus Job Retention Scheme (CJRS) is changing

How different circumstances affect the SEISS scheme

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Self-employed individuals to receive second SEISS grant from UK Government

Temporary VAT zero-rating of PPE 

Tax-free childcare and 30 hours free childcare during the Covid-19 pandemic

Can we 'furlough' the company car?

P11D forms still due by 6 July 2020

Draft legislation: Taxation of Coronavirus (Covid-19) support

Key tax dates for your diary: June to September 2020

 

You can also read more about each of the schemes and the range of funding and grant support on our Acuity: Covid-19 pages on our website >read more

 

The Coronavirus Job Retention Scheme (CJRS) is changing

Update 12-06-20: The Coronavirus Job Retention Scheme will close on 31 October 2020.

From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.19942 MACO Tax Planning 30

The first time you will be able to make claims for days in July will be 1 July, you cannot claim for periods in July before this point. 31 July is the last day that you can submit claims for periods ending on or before 30 June.

From 1 August 2020, the level of grant will be reduced each month. To be eligible for the grant employers must pay furloughed employees at least 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.

The timetable for changes to the scheme is set out below. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours:

  • There are no changes to grant levels in June.
  • For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
  • For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
  • For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
  • For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.

The table shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time. Wage caps are proportional to the house not worked. 

CJRS Government contribution table 12062020

Update 29-06-20: UK Chancellor Rishi Sunak outlined changes to the furlough scheme during the daily press briefing. 

The Chancellor stated that in June the furlough scheme will continue as before. From July, there will be a new flexible furlough scheme - see below - and employers will be asked to cover National Insurance and employer pension contributions in August.

By September, businesses will pay 10% of wages for furloughed staff, and in October 20%, the UK chancellor said.

This means the subsidy will taper off from August, with businesses expected to pay a greater share of their staff salaries, starting with covering National Insurance and pension contributions.

From September the government will cover only 70% of salaries, to a cap of £2,187.50 and from October it will pay 60%, to a cap of £1,875. Employers will make up the shortfall to get salaries back to 80% of pre-Covid lockdown levels. There is more on this below.

Flexible Furloughing of employees 

From 1 July, employers can bring back to work employees, for any amount of time and any shift pattern, whom have previously been furloughed, while still being able to claim CJRS grant for their normal hours not worked. 

When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.

The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3-week furlough period to be completed by 30 June.

Employers will have until 31 July to make any claims in respect of the period to 30 June.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. >read more on gov.uk

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From 1 July 2020, Businesses will have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.

Businesses can decide the hours and shift patterns that their employees will work on their return and you will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.

Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing.

When claiming the CJRS grant for furloughed hours, you will report and claim for a Construction iconminimum period of a week. Businesses can choose to make claims for longer periods such as on monthly or two weekly cycles if this is more appropriate.

You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. We can assist and make the claims for you.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the government grant will be tapered as follows:

• For June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER’s NICs) and pension contributions for the hours the employee does not work – employers will have to pay employees for the hours they work after 1 July 2020.

• In August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER’s NIC’s and pension contributions. 

• From 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500.

• For the final month of the scheme in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.

• the cap on the furlough grant will be proportional to the hours not worked.

Important datesMACO TPL business planning icon

It is important to note that the scheme will close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June.

This means that the final date that you can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June.

Employers will have until 31 July to make any claims in respect of the period to 30 June.

Guidance and support

Further support on how to calculate claims with the extra flexibility will be available by 12 June and we will keep you informed about the detail and your written requirements in due course. If you have any questions please do get in touch with us.

You can read more on gov.uk >read more

Find out more about the CJRS, eligibility criteria and how to apply on maco.co.uk >read more

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How different circumstances affect the SEISS scheme

Update 12-6-20: The scheme is being extended although different circumstances may affect your eligibility. 

The Self-Employment Income Support Scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

If you are self-employed or member of a partnership find out how your circumstances can affect your eligibility for the scheme.

How the grant works

If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance.

HMRC will work out if you are eligible and how much grant you may get. But you can follow these steps to help you understand how we will do this and what you can do now.

Who can claim

You can claim if you are a self-employed individual or a member of a partnership and all of the following apply:

  • you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
  • you traded in the tax year 2019 to 2020
  • you intend to continue to trade in the tax year 2020 to 2021
  • you carry on a trade which has been adversely affected by coronavirus

Your business could be adversely affected by coronavirus if, for example:

  • you are unable to work because you:
  • are shielding
  • are self-isolating
  • are on sick leave because of coronavirus
  • have caring responsibilities because of coronavirus
  • you have had to scale down or temporarily stop trading because:
  • your supply chain has been interrupted
  • you have fewer or no customers or clients
  • your staff are unable to come in to work

Find examples of when the ‘adversely affected’ criteria will be met, click here.

You should not claim the grant if you are a limited company or operating a trade through a trust.

To work out your eligibility HMRC will first look at your 2018 to 2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you are not eligible based on the 2018 to 2019 Self-Assessment tax return, they will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.

Find out how HMRC will work out your eligibility including if they have to use other years, click here. 

 

Self-employed individuals to received second SEISS grant from UK Government  

Chancellor Rishi Sunak has said self-employed workers across the UK will be able to access a second Grant from the government to cover lost income while the country is in lockdown.

The grants paid out by the Self-Employment Income Support Scheme (SEISS) will be worth 70% of a self-employed person's average monthly trading profits to cover three months' worth of income. They will be capped at £6,570 - £2,190 per month.

The scheme so far has been used by 2.6 million people and has paid out £6.8bn in claims to self-employed who have been affected by the impact of coronavirus on the economy.

This is the second and final time grants will be offered, the chancellor said. The Government offered the first grant to the self-employed in March, paying 80% of average monthly trading profits, capped at £7,500.

Covid 19 maco5Key points of SEISS

• Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.office worker icon

• Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

• The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase.

Further guidance on the second grant will be published on Friday 12 June and we will keep you up to date with the details when we know them.

You can read more on gov.uk >read more 

Find out more about the SEISS, the eligibility criteria and how to apply on maco.co.uk >read more

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Tax-free childcare and 30 hours free childcare during the Covid-19 pandemic 

To help make sure critical workers can continue to access the childcare they need to enable them to work, even if their circumstances have changed during the Pandemic, the Government have made some temporary changes.

Find out about temporary changes that may affect you if you are applying for, or already getting, Tax-Free Childcare or 30 hours free childcare on gov.uk >read more

The changes may affect you if you, or someone you live with, are:19796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 18

• on furlough
• not able to work or you are working less
• self-employed
• a critical worker

If you are on furlough

If your employer has no work for you they might be able to keep you on the payroll and put you on temporary leave instead. This is known as being put ‘on furlough’ and you are paid 80% of wages through the Coronavirus Job Retention Scheme.

You should apply, or reconfirm if you already have a childcare account, if your wage, and your partner’s wage if you have one, is:
• at least the National Minimum Wage for 16 hours a week
• below the normal minimum income requirement, but you would normally expect to meet the income requirement

If you are not able to work or you are working less

You should apply or reconfirm if you already have a childcare account if you are:

• getting sick pay or statutory sick pay (SSP) – time spent on sick pay or SSP will count as working and meeting the minimum income requirement
• taking unpaid leave to care for others, such as your children - if you expect your income to meet the minimum income requirement (at least the National Minimum Wage for 16 hours a week) after coronavirus
• living with someone who has coronavirus - you must stay at home - if you expect your income to meet the minimum income agreement (at least the National Minimum Wage for 16 hours a week) after coronavirus
• working less, your hours have been reduced and your wage:
• meets the minimum earnings requirement
• is below the normal minimum earnings requirement but you would normally expect to earn above it

If you are self-employed19796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 14

You should apply or reconfirm if you already have a childcare account if you are:
continuing to work, and your earnings: 

• are above the minimum earnings requirement
• are below the normal minimum earnings requirement but you would normally expect to earn above it
not able to get work because of coronavirus:
• you may be eligible to claim a grant through the Self-Employment Income Support Scheme - payments made to you through the scheme will count as earnings
• and you are not eligible for self-employed income support but would expect to earn at least the minimum income requirement
If you are claiming Universal Credit
If you are now claiming Universal Credit and were getting:
• Tax-Free Childcare, you cannot apply or reconfirm for Tax-Free Childcare - if you stop claiming Universal Credit you can apply for Tax-Free Childcare again
• 30 hours free childcare, and you meet the revised minimum income requirement or would expect to normally, you should apply or reconfirm if you already have a childcare account

If you missed the 31 March deadline

If you have missed the application or reconfirmation deadline for 30 hours free childcare, you should apply or reconfirm if you already have a childcare account. Local authorities will be able to extend the validity dates on 30 hours codes for eligible critical worker parents during the summer term.

If you are a critical worker and If you are working more

If you are a critical worker you may have exceeded the maximum income threshold of £100,000 per year - If this is because of increased hours as a direct result of coronavirus, you will still be eligible for 30 hours and Tax-Free Childcare for the current tax year.

You can read more on gov.uk >read more

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Can we 'furlough' the company car? 

During the lockdown period many employees and directors have not been using their company cars and it has been sitting on their driveway.

You might think that means that the benefit of having a company car does not apply but unfortunately HMRC do not agree.

HMRC have recently confirmed that there continues to be a taxable benefit unless the car is unavailable for private use for 30 or more consecutive days. They would continue to regard the car as available to the employee unless the keys or fobs are returned to the employer or to a third party as instructed by the employer. 

This guidance needs to be taken into consideration when form P11Ds are completed.
Note also that where the employee is provided with a motor car with zero CO2 emissions there is no taxable benefit in kind for 2020/21.

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Other support and funding available to businesses, individuals and third sector organisations:

 

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P11D forms still due by 6 July 202019796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 03

Despite the coronavirus lockdown HMRC have announced that they will still expect P11d forms reporting expenses and benefits to be submitted by the normal 6 July deadline. 

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required.

Note also that trivial benefits of no more than £50 provided to employees need not be reported.

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Draft legislation: Taxation of Coronavirus (Covid-19) support

The UK Government has opened a consultation and welcomes views on its draft legislation to introduce rules on the taxation of coronavirus (COVID-19) business support grants. The consultation closes on 12 June 2020 >Covid-19 support payments consultation 

The UK Government are inviting views on the technical effectiveness of this measure, MACO TPL financial structurewhich ensures that grants within the legislation are subject to tax. These grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax.

It will also give HM Revenue and Customs (HMRC) powers to recover payments to which recipients were not entitled to under the Self-Employment Income Support Scheme or the Coronavirus Job Retention Scheme payment, or where a Coronavirus Job Retention Scheme payment has not been used to pay employees, make pensions contributions, pay PAYE or National Insurance contributions.

HMRC will be able to do this by raising Income Tax assessments or requiring taxpayers to submit a Self-Assessment tax return.

HMRC will also be able to charge a penalty in cases of deliberate non-compliance. Further provisions may be included in the final new clause and schedule when tabled. When we hear more we will publish further updates on these pages. 

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Key tax dates for your diary: June to September 2020 MACO project

  • 01/06 Corporation tax for year to 31/8/19 (unless pay quarterly)
  • 19/06 PAYE & NIC deductions, and CIS return and tax, for month to 5/6/20 (due
  • 22/06 if you pay electronically)
  • 01/07 Corporation tax for year to 30/9/19 (unless pay quarterly)
  • 05/07 Last date for agreeing PAYE settlement agreements for 2019/20 employee benefits
  • 05/07 Deadline for agents and tenants to submit returns of rent paid to non-resident landlords and tax deducted for 2019/20
  • 06/07 Deadline for forms P11D and P11D(b) for 2019/20 tax year. Also deadline for notifying HMRC of shares and options awarded to employees.
  • 19/07 PAYE & NIC deductions, and CIS return and tax, for month to 5/7/20 (due 22/07 if you pay electronically)
  • 31/7 50% payment on account of 2020/21 tax liability due. However, due to Covid-19 taxpayers may defer the payment until 31/1/21 without incurring interest and penalties.
  • 01/08 Corporation tax for year to 31/10/19 (unless pay quarterly)
  • 19/08 PAYE & NIC deductions, and CIS return and tax, for month to 5/8/20 (due 22/08 if you pay electronically)
  • 01/09 Corporation tax for year to 30/11/19 (unless pay quarterly)
  • 19/09 PAYE & NIC deductions, and CIS return and tax, for month to 5/8/20 (due 22/08 if you pay electronically)

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HMRC: Time to pay service19796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 23

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. You are eligible if your business pays tax to the UK government and has outstanding tax liabilities.

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559/0800 0241 222. If you’re worried about a future payment, please call them nearer the time.

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We have summarised the various announcements that have been made by the UK and Scottish Governments to support businesses, employers, employees and the self-employed during this period of disruption.

Covid-19 support available to businesses, individuals and third sector organisations facing the impact of the pandemic and the lockdown restrictions >read more 

Summer Statement 2020
Temporary VAT zero-rating of PPE